"So only those who have collateral can borrow?"

"This is our bank rule"

"It's a silly rule. It means only the rich can borrow." This was the essence of a conversation that Muhammud Yunus had with a bank manager when he was trying to get credit for poor people in his village in Bangladesh in order to provide start up funds for a small business. In particular one woman was desperately trying to earn a living making bamboo stools in order to feed her family. She was stymied for lack of $ 0.22 to buy raw materials for each stool. Yunus, a PhD in economics was infuriated with a system forcing a woman to remain in poverty, even watching her children die of starvation, for lack of pennies of credit. (Banker to the Poor, 2007)

Anne had an opportunity to participate in a Toronto workshop where Yunus was one of the speakers. He is a professor at a Bangladesh university, a graduate from an American university, teaching complex economic theories to students while realizing that poor people, mostly women, in adjacent communities were working 12 hours a day and struggling with a system which provided no hope of ever making a living. The financial system Yunus was teaching was in complete contradiction to the poverty level he saw in communities around the university.

He had to fight the system. As a starting point, the bank head office finally agreed to allow him to act personally as a guarantor in order to borrow $37.00, the necessary money to provide start up funds for 46 struggling illiterate entrepreneurs in the village, but he would be held responsible for repayment of every penny of borrowed money. The bank was making an exception because of his status in the community and noted that they would not allow any subsequent loan.

Yunus realized the banking system was designed only to make rich people richer, especially shareholders in banks and corporations. It had no role in alleviation of suffering in the community. This was a system he felt obligated to change. After a long story, many years long in fact, he was able to establish the Grameen (Bengali for 'village') bank. It was everything the banking system lacked.

First of all, the bank was non-profit. Secondly instead of borrowers applying for loans in fancy offices, tellers went out on foot to markets in remote villages, sitting on the ground and encouraging potential 'clients' to become borrowers.

Most were illiterate women, often forbidden by husbands and families to try to get out of their desperate situations. Tellers had to convince a minimum of 5 borrowers to form group which would be responsible for loans and repayment of debts while tellers would record transactions in ledgers by hand. It was a long hard struggle, opposed to not only the financial institutions but to the basic culture of communities.

The story is too long and tenuous to relate in a short article, but Yunus' description of the process makes fascinating reading. The final chapter gives some indication of his success. The Grameen Bank at time of writing had "…..2.6 million borrowers, 92% being women. There were 1,181 branches in 42,127 villages. The total amount of loans disbursed by Grameen Bank, since inception was $3.9 billion. Out of this $3.6 billion has been repaid, a recovery rate standing at 98 percent". "…..proving that businesses with social objectives can and do work."

The bank "..believes that education is one of the primary components for moving oneself out of poverty". They encourage borrowers to send their children to school and require each to establish savings accounts as part of their repayment of debt. Even the minimal interest rate charged has allowed the bank to subsidize school fees and uniforms and so far 466 students have received higher education loans to attend various universities, medical schools, engineering schools and other professional institutions. Priority is given in granting scholarships to girls and young women.

Yunus and the Grameen Bank were winners of a Nobel Peace Prize.